New Delhi, March 25 -- I have invested in an ELSS scheme under the Dividend Reinvestment Plan. Does the reinvestment of dividends qualify for a rebate under Sec 80C?

Yes. The dividend reinvested is treated as a fresh investment in the ELSS. Therefore, it is eligible for deduction u/s 80C within the overall limit of Rs.1.50 lakh during the financial year the dividend gets reinvested. The money doesn't need to be debited from your bank account to claim a deduction under Section 80C regarding ELSS.

Please note that each reinvested dividend will have a further lock-in of 3 years. The dividend so reinvested is taxable in your hands in the year it is reinvested, even if you have not received the dividend amount in your bank account.

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